If you’re a partner or a compliance officer at a law firm, I want you to take a quick second and think about your last AML review. Was it a check the box exercise to keep the SRA happy?
If the answer is yes, we need to have a serious chat.
The regulatory landscape for solicitors is shifting fast. The Financial Conduct Authority (FCA) is stepping onto the field with a much more active role, and they play a much tougher game than we've seen in the past. Today, we’re breaking down why the FCA AML Audit is the new essential safeguard—and why "good enough" policies just won't cut it anymore.
Why the "Old Way" of AML is Riskier Than Ever
Historically, many of us approached AML compliance through a traditional SRA lens. But let’s be real: that approach is becoming a major liability. The FCA’s style is risk-based, evidence-focused, and—most importantly outcome-driven. They don’t just want to see your manual; they want to see your proof.
Takeaway: Think of it like this: The SRA asks if you have a fire extinguisher. The FCA wants to see the maintenance logs, the staff training records, and proof that you know exactly how to use it when things get hot.
What’s Under the Microscope? (The Key Hit-List)
If a FCA auditor walked into your office tomorrow, here is exactly where they’d be looking. Are you confident in these five areas?
1. Your Risk Assessment (No more templates!)
Auditors are tired of seeing "copy-pasted" firmwide risk assessments. They want a document tailored to your specific clients, your practice areas, and your geography. If it’s a generic template from years ago, you're going to have a problem.
2. CDD & Source of Funds and Wealth
This is the #1 cause of regulatory findings. It’s not just about a passport copy anymore. You need to prove you understand the nature of the activity. Where did that money actually come from?
3. Ongoing Transaction Monitoring (CMRAs)
The FCA expects "continuous oversight." You can’t just vet a client at the door and walk away. You need to have a robust Client Matter Risk Assessment showing why you made the decisions you did. If it isn't written down, it didn't happen!
4. Senior Management Accountability
The FCA puts a huge weight on the people at the top. Do the partners actually understand the risks? In the FCA's eyes, an AML failure is rarely an isolated glitch—it’s a leadership issue.
5. The Independent AML Audit (The "Must-Have")
This is the big one. You are expected to commission an independent AML audit. This means someone not involved in the day-to-day operations needs to stress-test your AML systems and provide an actionable report.
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